The company will continue to shed subscribers in the coming
months because of the Nextel closing before rebounding next
year, Hesse said today in an interview. Sprint rose 7.3 percent
to $6.16 at the close in New York.

“We’re glad to get the second quarter behind us,” Hesse
said. “People underappreciate the size of the effort involved
with the turndown of the Nextel network -- it is larger than
most expected. We’re not finished yet, but it is gradually
getting back to normal.”

A swing to user gains would mark an end to a seven-year
streak in which more than 10 million monthly-contract
subscribers left Overland Park, Kansas-based Sprint.

“I may have to change my numbers,” John Hodulik, an
analyst with UBS AG in New York, said in response to Hesse’s
forecast. Hodulik’s current estimates call for a loss of 200,000
monthly subscribers next year, with a full-year gain not coming
until 2015.

Sprint, which was acquired by SoftBank Corp. (9984) this month for
$21.6 billion, pulled the plug on the Nextel system on June 30
as it revamps its technology. The company lost 1.05 million
monthly subscribers in the period, largely because of Nextel
users departing. Analysts projected a loss of 872,000.

$36 Billion

Since buying Nextel Communications Inc. for $36 billion in
2005, the company had struggled to integrate the network with
its own and wrote down most of the purchase price. Sprint is now
focused on building a faster system using a standard called
long-term evolution, or LTE, helping it compete with larger
rivals Verizon Wireless and AT&T Inc. (T)

Sprint posted a loss of $1.6 billion, or 53 cents a share,
in the second quarter, wider than the 31 cents estimated by
analysts. The Nextel shutdown buoyed depreciation expenses, and
Sprint had to spend extra money to break so-called backhaul
access contracts, adding costs of 21 cents a share.

Sales rose 0.4 percent from a year earlier to $8.88
billion, helped by a higher rate of revenue per customer, Sprint
said. That beat the $8.73 billion average estimate of analysts,
according to data compiled by Bloomberg.

“Investors may have to be patient: Subscriber trends will
likely remain lackluster for the next couple of quarters as
Sprint focuses on the network upgrade,” Jonathan Chaplin, an
analyst with New Street Research in New York, said today in a
research note. Chaplin has a buy rating on the stock.

Higher Bills

The carrier’s average customer phone bill grew to $64.20
from $63.38 a year earlier. Analysts had projected $63.69.
Sprint also said it sold 1.4 million units of Apple Inc. (AAPL)’s
iPhone.

Tokyo-based SoftBank, which also reported earnings for the
April-June quarter today, has used the iPhone to drive customer
growth in its home market. It added 810,500 users over the three
months, outpacing its two larger rivals in Japan.

SoftBank said net income rose to 238.3 billion yen ($2.4
billion) from 105.6 billion yen a year earlier as it boosted
subscribers and increased profit margins. The result beat the
198 billion-yen median estimate of three analysts surveyed by
Bloomberg News.

Cash Infusion

SoftBank’s takeover included a $5 billion cash infusion,
giving Sprint money to bolster its network and pursue its own
acquisitions. Earlier this month, Sprint bought out the
remaining shares of Clearwire Corp. for $3.9 billion, giving it
full control of a company that it majority owned. The deal
provides Sprint with a large swath of airwaves that it will use
to improve its network.

To stand out from rivals, Sprint pledged this month to give
contract customers unlimited service as long as they remain with
the company. Still, its competitors are moving ahead with their
own promotions. Verizon Wireless and AT&T have both followed T-Mobile US Inc. (TMUS)’s lead in making it easier for customers to
upgrade their phones.

Sprint may be the only major carrier to lose contract
customers in the second quarter. Verizon Wireless added 941,000
monthly subscribers, while AT&T gained 551,000. T-Mobile,
meanwhile, added monthly contract customers last quarter for the
first time in three years, according to people familiar with the
matter. The company will report its results on Aug. 8.